Vodafone Plans to Divest Stake in Indus Towers

After much speculation of Airtel acquiring Vodafone’s stake in Indus Towers, the news finally came that Vodafone Group has announced its plan to sell its entire $2.3 Billion stake in the company. The sale is poised to happen through a stock market block deal next week as part of the British firm’s effort to repay debt.

Indus Towers

Indus Towers is one of the largest telecom tower companies in the world, with over 185,000 towers across India. The company was founded in 2007 by a joint venture between Bharti Airtel, Vodafone, and Idea Cellular. As per the last shareholding pattern, Airtel is the largest investor in Indus with a 47.95% holding and Vodafone owns a 21.05% stake via various group entities. The remaining 30.97% stake is publicly traded on the stock exchanges. The final stake sale by the Vodafone group is yet to be decided and could be lower than 21.05%.

Today’s News:

On 19 June, approximately 20% equity stake in Indus Towers was sold via block deals. A majority proportion of this, 18%, was sold by the British Vodafone Group after speculations arose on Friday. The 20% stake deal involved the sale of 53.30 crore shares of the mobile tower company, currently valued at Rs. 17,065 Cr. Vodafone Group through this sale has raised Rs.15,300 Cr from the stake sale with which it plans to clear off its net debt of $42.17 Billion. The UK-based company’s ownership in Indus Towers now stands at 3.1%.

Stock Performance

The block deals have induced a spike in the volume of the stock of Indus Towers by pulling it down around 10%to a low of Rs. 324 on NSE at the opening of today’s intra-day trade. However, shortly after the block deal Bharti Airtel announced that it had acquired a 1% equity stake in the company. Meanwhile, Vodafone Idea’s share price went down by 2.43% at Rs.16.45 

Conclusion: This deal could come off as the second-largest in India following the ITC transaction earlier this year. Due to such massive divestments, the share price of Indus Towers could hit new records.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.